In today’s Pound to Dollar forecast I discuss reports over the past few days of an increased potential of a trade agreement, or at least a truce to be agreed by leaders Donald Trump and Xi Jinping.
U.S Treasury secretary Steven Mnuchin spoke to CNBC earlier in the week and commented that he felt that a trade deal was 95% complete. However, we also need to be cautious that this final 5% may well be the large sticking points and enough to not see progress.
For those that have followed Brexit and the Pound in the past few years, it does bring back memories of the Brexit agreement between the UK and EU being 90% complete for a long period of time, and we all know that this is still very much an ongoing saga.
Reports a few hours ago have suggested that President Trump has been seen shaking hands with the Chinese President so it does appear that so far things are moving in the right direction. Progress between the two superpowers may lead to Dollar strength against Sterling but a fall through in talks could do quite the opposite.
Important US economic data due next week
Next week we have important economic data out from the US, most notably on Wednesday and Friday. Manufacturing, mortgage approvals and jobless claims all are released on Wednesday and Non-Farm Payroll employment data is released on Friday.
Both of these releases have the potential of impacting when the US may next seek to change interest rates and recently the market has started to price in an interest rate cut. If the data is particularly positive then this may lead to strength for the Dollar as it will lower the chance of a rate cut.
Interest rate cuts can be seen as negative for a currency, so should speculation of a cut for the US in July decrease then this may lead to further strength for the Dollar.
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